Litigation Release No. 21491 / April 19, 2010

Accounting and Auditing Enforcement Release No. 3127 / April 19, 2010

SEC SETTLES WITH FIVE DEFENDANTS IN SEC V. COLLINS & AIKMAN; DAVID A. STOCKMAN CONSENTS TO INJUNCTION IN CONNECTION WITH COLLINS AND AIKMAN FRAUD AND AGREES TO PAY $7.2 MILLION IN CIVIL PENALTIES, DISGORGEMENT, AND PREJUDGEMENT INTEREST

Stockman, C&A's former CEO and Chairman of the Board, Stepp, C&A's former CFO and Vice Chairman of the Board, McCallum, a former C&A Board member, and Cosgrove, C&A's former Corporate Controller, without admitting or denying the Commission's allegations, would each consent to entry of a final judgment permanently enjoining them from violating the antifraud provisions of Sections 17(a)(2) and 17(a)(3) of the Securities Act of 1933 ("Securities Act") and the reporting, recordkeeping, internal controls, and lying to auditors provisions of the Securities Exchange Act of 1934 ("Exchange Act"). Stockman and Stepp also would be permanently enjoined from violating the Sarbanes-Oxley certification provisions. Barnaba, C&A's former Vice President and Director of Purchasing-Plastic Division, without admitting or denying the Commission's allegations, would consent to entry of a final judgment permanently enjoining him from violation of the reporting, recordkeeping, internal controls, and lying to auditors provisions of the Exchange Act.

Pursuant to the settlement, Stockman has agreed to pay $7.2 million, comprised of $400,000 in civil penalties, disgorgement of $4,424,000, and prejudgment interest of $2,376,000, with the disgorgement and prejudgment interest obligations subject to an offset of up to $4.4 million for payments Stockman makes to settle two securities class action lawsuits against him seeking recovery of the same money as the Commission. Stepp and McCallum have each agreed to pay a civil penalty of $75,000, Cosgrove has agreed to pay a civil penalty of $40,000, and Barnaba has agreed to pay a civil penalty of $20,000. Upon motion to the Court, the civil penalties paid by Stockman may be distributed pursuant to the Fair Funds provisions of Section 308(a) of the Sarbanes-Oxley Act of 2002.

In addition, based upon the anticipated entry of a permanent injunction against him, Cosgrove has offered to consent, without admitting or denying the Commission's findings, to the issuance of an administrative order pursuant to Rule 102(e) of the Commission's Rules of Practice, suspending him from appearing or practicing before the Commission as an accountant with a right to apply for reinstatement after three years.

The SEC's complaint alleges that Stockman participated in fraudulent rebate transactions, joined by Stepp, McCallum, Cosgrove, and Barnaba, to inflate C&A's reported income between 2001 and 2004. The complaint alleges that Stockman and other defendants obtained false documents from suppliers designed to mislead C&A's external auditors. The complaint also alleges that Stockman and other defendants caused C&A to file financial statements with the SEC that materially misrepresented C&A's financial results. According to the complaint, during the time Stockman was engaged in this conduct, he was collecting millions of dollars in management fees C&A paid Stockman's private equity fund, Heartland Industrial Partners.

As part of the settlement, the Commission has submitted proposed stipulated dismissals of its fraud charges under Section 17(a)(1) of the Securities Act and Section 10(b) and Rule 10b-5 under the Exchange Act against Stockman, Stepp, McCallum, Cosgrove, and Barnaba. In addition, the Commission has submitted proposed stipulated dismissals of all claims against defendants John G. Galante, C&A's former Treasurer, Christopher M. Williams, C&A's former Executive Vice President of Business Development, Gerald E. Jones, C&A's former Chief Operating Officer and Executive Vice President of Fabrics, and Thomas V. Gougherty, C&A's former Controller-Plastics Division. C&A, without admitting or denying the Commission's allegations, previously consented to the entry of a final judgment permanently enjoining it from, among other things, violating the antifraud provisions of the federal securities laws, Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Exchange Act Rule 10b-5.

The SEC's civil enforcement action will be concluded if the Court approves the proposed settlements and dismissals.